Georgia PERAKIS(joint work with A. Sood)

Dynamic Pricing in a Competitive Environment

In this talk we will discuss the problem of dynamic pricing for perishable products in a competitive (oligopolistic) market. We introduce a dynamic optimization model and study Nash equilibrium policies that arise for the sellers. We first consider the case where demand is deterministic and use results from game theory and variational inequalities to study the existence and uniqueness of such policies. We propose an algorithm for computing equilibrium policies and provide conditions under which the algorithm converges to a solution. We further extend our results when demand is stochastic. The model in this paper can be used in a number of application areas including the airline, service and retail industries. Finally, we illustrate our results through some numerical examples.